Technical Analysis Of Hang Seng Index : Market Outlook

The Hang Seng index represents the Hong Kong stock market.

Along with the Nikkei index of Japan, it is one of the most watched index in Asia. It gauges how the Asian markets are performing.

One of the things that I notice about Hang Seng is when the tech sector and semi sector in US does well, the Hang Seng Index also does very well.

When the QQQ, XLK and SMH are in an uptrend or reach important support areas, the Hang Seng will usually follow them as well.

So far, the Hang Seng has had a nice run up in 2017 and 2018. It has been able to bottom out from the February 2018 plunge and at this moment is steadily climbing up. We will look at the charts frequently to see what will happen to Hang Seng.

April 17 2018 (Tuesday)

Just like the Dow Jones and S&P 500, the Hang Seng index has been going through ups and down. It is also trying to break a downtrend line which if it is successful, then we can expect more bullishness in the HSI.

The HSI is still staying above its rising 200 MA and then is something positive for the Hong Kong stock market. The long term health of the bull market in HSI is still intact. Support can be found at the 29000 area and that is an area to watch.

What the HSI may be forming right now is a reverse head and shoulders pattern albeit a mini one. Therefore, if we anticipate a pattern to form, we will switch to a lower time frame such as the 60 min chart to find a possible reversal pattern.

If a reversal pattern forms in the 60 min chart, such as an ascending triangle then we can expect HSI to bounce up. Do be careful if the HSI drops below the support area which is below the left shoulder in the daily chart.

February 27 2018 (Tuesday)

February 26 2018 (Monday)

Technical Analysis Of Hang Seng (February 12 2018)

It has been a long time since I had a look at Hang Seng but I remember that I asked my readers to take a look at the rising 60 min 50 MA to gauge the trend of the Hong Kong market. As long as it stays above the rising 50 MA then things are still fine. On the other hand when an index falls below its rising 50 MA then one should be careful.

The chart above shows the 60 min chart of Hang Seng index. As you can see, the index was alright as long as it stayed above the rising 50 MA. Hang Seng formed a head and shoulders top and this marked the top for the index. Using the 50 MA may not be perfect but at least it gives us a way to gauge the performance of the index and catch it near the top.

Currently it is trying to stabilize after a long drop. The box area will be crucial. We want to see it break above the 60 min consolidation box and also go back above the 60 min 50 MA before we deem it safe for Hang Seng bulls.

How A head And Shoulders In QQQ Pointed To A Devastating Market Plunge

The chart above is the daily chart of Hang Seng. As you can see the index is sitting at a price support area. Today we have a doji pattern that signifies slowing selling momentum and we might have a trend change in the lower time frames. The MACD Histogram Valley is present and a shortening will hint to a reversal.

Also do take note of the daily stochastics which is very oversold and just gave a buy signal. This is good signs but we still need to look at the smaller time frames to make sure the short term downtrend has ended.

Technical Analysis Of Hang Seng Index (January 23 2018)

The reason why I was bullish on Hong Kong was because its trend is up.

I have learnt that it is best to be simple and follow the trend. If the trend of a stock or index is up, we should be bullish.

The Hang Seng index is now in uncharted territory. That means its making new all time highs every few days. To analyze this kind of environment, we will use the 60 min chart.

The chart above is the 60 min chart of Hang Seng.

As long as the index stays above the rising 50 MA and 200 MA, we should continue to be bullish on Hong Kong. Many stocks in Hong Kong will continue to rise.

There are layers of support which I have drawn with boxes. These are consolidation supports which will help to keep Hang Seng up in the event of a correction. Thus, it will not fall drastically but step by step if there is a correction.

The trend is still up. Let's continue to be bullish until the trend changes.

Technical Analysis Of Hang Seng Index (January 11 2018)

The Hang Seng Index has been in a very strong uptrend recently. Will the bull run continue?

In order to answer this question, we will look at multiple time frames. Starting with the monthly charts and then zooming in to the 60 min chart. That way we will cover all bases and get the big picture.

The chart above is the monthly chart of Hang Seng Index.

From what we can see, the index has gone through a lot of growing pains. It achieved an all time high of 31,958 back in 2007 and it never got back to its all time high since then. However, the performance of the Hang Seng has been better than its Asian counterpart, the Nikkei.

While Nikkei is far from its all time highs, Hang Seng has been catching up and now is on the brink of surpassing the all time highs set in 2007.

I believe the Hang Seng is very likely to overcome the old highs and make new all time highs.

The reason is because the supply from 2007 has more or less been absorbed when the index shot up near all time highs back in 2015.

So the bull run in 2017 will not encounter the same amount of resistance compared to 2015 because a lot of resistance/supply has been absorbed.

That is why, if the weekly uptrend and daily uptrend in Hang Seng continues, the index will likely make an all time high.

Let us now zoom into the weekly chart of Hang Seng.

As you can see from the chart above, the index is in a very strong weekly uptrend. A trend in motion tends to stay in motion. Even if the bears try to creep in, it would be an extremely difficult job for the bears to win.

The reason is because there are so many layers of support in Hang Seng.

Since the index is in a weekly uptrend, any dips and corrections are buyable and investors should not fear any corrections. They are just opportunities to buy stocks cheaper. That is the benefit of uptrends.

With lots of support below and an all time highs approaching, the path of least resistance would definitely be up.

The daily chart above shows that Hang Seng is also in a very very nice uptrend.

Notice how the index stayed above the rising 50 MA most of the time. Fund managers will tell you that the index is in a very healthy state. 

There will be many corrections here and there but all of them are buying opportunities because the trend is up. I believe as long as Hang Seng stays above the rising 50 MA, it will continue to drift higher.

We now zoom into the 60 min chart.

I won't be doing the 15 min chart and below because all of these things happen too fast in smaller time frames.

The 60 min chart also shows us that it is in a very nice uptrend. I think the 20 MA and 50 MA is getting closer and hugging the index as it makes a slow step by step rise. So, for the Hang Seng I would refer you to its rising 60 min 200 MA. 

As long as Hang Seng stays above its rising 60 min 200 MA, I would not be too worried of a big correction.

There is something to be said of the step by step rise.

The step by step rise is actually quite healthy as the index approaches the all time highs. This tells us that the index is refusing to go lower. On the other hand, it is cautious but slowly absorbing supply from the 2007 highs. 

I have drawn some consolidation boxes on the chart.

If the index breaks above the most recent one, it will continue to move higher. The other two previous boxes are for our reference. If Hang Seng stays above those two boxes, I believe it will continue to move higher.

If it drops below each box, we should be careful of a correction.

So far I do not see any weakness in Hang Seng in all time frames. So stay bullish.

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